Do you have the right team for increasing your efficiency in financial administration?

Financial administration is viewed as an important aspect of business, and must work smoothly for a company to succeed. In times of uncertainty, the business environment can change significantly, even in the short term. Businesses must then be able to respond to changes by reorganizing.

A major change has recently begun in the market, as medium-sized enterprises have increasingly outsourced their financial administration. The need to create efficiencies means that the outsourcing of financial administration personnel to a trusted partner is now viewed as a quick and efficient solution that enables companies to fully focus their resources on their core business.

Cost savings tend to lie behind any action, including the streamlining of processes. They may also create the need for an overall transformation. Digital technologies and new electronic solutions are the perfect tools for generating cost savings. Few companies have the capabilities (or willingness) to develop their own digital solutions in order to improve their operations. In such cases, it makes sense to look for suitable partners. A good partner can take a company into the new digital age and increase efficiency.

I think it is important that a partner wants to understand its customer’s core business and that the same rules apply to both of them. Mid-sized businesses, in particular, value agility and flexibility, but the well-being of the employees being transferred is also highly important to outsourcing companies. Such employees have extensive know-how and understanding of the company’s financial administration. Personnel development, intended to ensure the preservation of this tacit knowledge, plays a key role when choosing an outsourcing partner. For mid-sized enterprises, the answer lies in more efficient use of existing resources by means of robotic process automation and other digital solutions. Offshoring will not necessarily provide similar economies of scale, since in SMEs volumes are much smaller than in large global corporations.

In other words, successfully turning financial administration into a service calls for a balance between all three levels: the people, applications, and IT. If there is not enough expertise or time in-house to master new digital solutions, the operations in question should be transferred to an external party that can take full responsibility for the simultaneous reorganization of all the areas.

Another major trend is the decreasing significance of customized financial administration applications. Customer-specific modifications were once common and it was important for every company to have its “own kind of” financial administration system. Time has shown, however, that customization and modification are often a waste of money. Standard solutions have often been proven to work well and are fully optimized. This is naturally beneficial to companies, since customized solutions tend to be costly and time-consuming – without providing any clear competitive edge. By eliminating customization, businesses can save both time and money, which is exactly what they want.

The third discernible trend is the decrease in routine work, due to automation and new digital solutions. A key question will be how outsourced financial administration employees are developed and how their work will change when new tools and solutions are introduced. We should remember that every company in the world is still run by real people – not robots – and human factors affect our behavior and what we feel works best. It has been noted that human values and the ability to develop the skills and motivation of individuals are highly valued when choosing an outsourcing partner. New digital solutions need someone to implement them and new innovations are not created without the ideas of people who understand the business in question. The ability to take responsibility for employees and develop their skills in the appropriate way is therefore crucial. Being able to lead transformation forms an integral part of IT convergence, regardless of whether or not a company has outsourced its financial administration.

Successful outsourcing of financial administration is usually performed by a partner who understands all of the necessary areas, as well as being aware of its limitations and expertise in a way which enables it to develop and reform its own operations. Outsourcing is a form of collaboration between the customer, outsourcing partner, and partners of the outsourcing partner. A good question is: how should such a combination be led and how could the customer benefit most?

Osmo Wilska

The author is Senior Vice President of Financial Process Services, responsible for outsourcing services in financial administration. Outsourcing services aimed at increasing the efficiency of financial processes provide smart, real-time information in support of decision-making, while freeing up time and resources for managing an organization’s core business. Osmo has more than 25 years of experience in managing and developing a number of businesses in the areas of outsourcing, financial administration applications, and IT technology and services.